How to create an 84 month asset with no payments for first 24 months beginning 12/30/16?

I am owed 450000.00 on a promissory note.  Loan period of 7 years with the first payment not due til the 25th month. Interest rate of 12%.

Comments

  • NotACPA
    NotACPA SuperUser, Windows Beta Beta
    edited October 2018
    What Q product are you running?  What operating system?  What Build/Release?

    And, does the interest accrue during the 1st 24 months?  How is that handled?

    Q user since DOS version 5
    Now running Quicken Windows Subscription, Home & Business
    Retired "Certified Information Systems Auditor" & Bank Audit VP
  • Rick Gumpertz
    Rick Gumpertz Member ✭✭✭
    edited September 2018
    Agreed: how interest accrues for the first 24 months is critical to setting up the account.  Also, once payments start, are the scheduled payments equal (like a mortgage)?
  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    edited September 2018
    The creation of the "asset" is pretty darned simple, if you're saying that you actually loaned out $450K.

    It's debit (increase) an "Other Asset" Account for $450K and credit (decrease) a "Checking" Account for the same amount.  In other words, a simple "transfer" (in Quicken-speak) out of your bank checking Account to this asset Account you've created would handle that.

    Now if you want to have Quicken recognize this as a "loan receivable" and establish a schedule of payments split between principal and interest, that's a different kettle of fish.  Quicken help provides some guidance about converting an asset Account to a "lending loan":

    --------------------------------------------------------------------------
    •   About lending loans

      A lending loan is a loan for which you are the lender and someone is paying
      you back on an amortized schedule. A lending loan is treated as an asset in
      Quicken that has a positive balance.


    1. Add an
      asset account
      , where value of the asset is the amount you are lending.
    2. In the final window of account setup, when you are asked Is there a Loan on this asset?, select No.
    3. Open the account you just
      created, click Account Actions icon (the Account
      Actions icon), and then choose Convert to a Lending Loan
      Account.
    4. In the Convert This Asset to a Lending Loan dialog, click Convert.
    5. Quicken creates an asset account with a payoff schedule. The account is
      identical to a "normal" loan account in Quicken. The only difference being the
      sign of the lending loan and its payments are opposite that of a "normal" loan.


    For more information, see: --------------------------------------------------------------------------

    but Quicken's mechanism for loans is pretty simple-minded, generally geared to mortgage loans and loans with mortgage-like terms.  It may not work well in your case.  You may need to work out the payment schedule outside of Quicken and make manual entries as payments are received.
  • Unknown
    Unknown Member
    edited May 2020

    What Q product are you running?  What operating system?  What Build/Release?

    And, does the interest accrue during the 1st 24 months?  How is that handled?

    Q16 Deluxe (R17.4 Build 25.1.17.4), Win10

    Yes, interest began accruing 12/31/16 at 5.5% based on a 365 day year during the Standstill period (First 24 months) and added to the principal at the end of the Standstill Period,12/30/18. Loan is to be amortized for 60 months of equal payments
    First payment due 1/5/19.
    I entered the asset (Promissory Note) and converted it as Quicken instructed. Went well except it calculated a monthly payment from the beginning of the loan and assumed payments made timely since.

    I need to create the asset and make it calc interest with a starting date for payments of 1/1/19.

    Balloon payment of balance due on 12/31/2023.
  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    edited May 2020

    What Q product are you running?  What operating system?  What Build/Release?

    And, does the interest accrue during the 1st 24 months?  How is that handled?

    So you've got the principal set up in the asset Account OK?

    If that's the case then don't turn that asset Account into a lending loan until after the Standstill period is over.  Presumably you can calculate the interest accrued over that period and simply add that amount the the asset Account at the appropriate time, crediting an interest income Category for the offset.

    The sum of the original amount plus the accrued interest then becomes the opening balance of the loan for purposes of calculating the required payment and the split between principal and interest.  At that point you can convert the asset Account into a lending loan and Quicken should be able to handle that.
  • Rick Gumpertz
    Rick Gumpertz Member ✭✭✭
    edited May 2020

    What Q product are you running?  What operating system?  What Build/Release?

    And, does the interest accrue during the 1st 24 months?  How is that handled?

    I agree.  Manually enter the first 24 monthly interest accruals as (accrued) Interest Income, thereby increasing the value of the asset.  Then set up the loan payment schedule using the new balance.
  • Rick Gumpertz
    Rick Gumpertz Member ✭✭✭
    edited May 2020

    What Q product are you running?  What operating system?  What Build/Release?

    And, does the interest accrue during the 1st 24 months?  How is that handled?

    Why would there be a balloon payment?  If amortized correctly over the last 5 years, the ending balance should be 0.  Or are you just mentioning that for things like round-off errors?  Am I missing something?
  • Rick Gumpertz
    Rick Gumpertz Member ✭✭✭
    edited September 2018
    Why would there be a balloon payment?  If amortized correctly over the
    last 5 years, the ending balance should be 0.  Or are you just
    mentioning that for things like round-off errors and the final payment being due 5 days earlier than other payments?  Am I missing
    something?
  • NotACPA
    NotACPA SuperUser, Windows Beta Beta
    edited May 2020

    What Q product are you running?  What operating system?  What Build/Release?

    And, does the interest accrue during the 1st 24 months?  How is that handled?

    Suzanne,
    Originally, you said 12%.  An hour ago you said 5.5%  Can you clarify?

    Is the 5.5% for the "standstill" period, and the 12% after that? 

    Also, is accrued unpaid interest (during the Standstill period) added to principal with each month ... or only at the end of the Standstill?  I.E., does each month's unpaid interest (during the Standstill) increase the Interest owed the next month?
    Q user since DOS version 5
    Now running Quicken Windows Subscription, Home & Business
    Retired "Certified Information Systems Auditor" & Bank Audit VP
  • Unknown
    Unknown Member
    edited May 2020

    What Q product are you running?  What operating system?  What Build/Release?

    And, does the interest accrue during the 1st 24 months?  How is that handled?

    Misread the note.  All this time, I thought the attorney had set it up with 12% interest but re-reading it, the 12% is only in the event of default.  Rate is 5.5%.

    Interest added at the end of the Standstill.
  • NotACPA
    NotACPA SuperUser, Windows Beta Beta
    edited May 2020

    What Q product are you running?  What operating system?  What Build/Release?

    And, does the interest accrue during the 1st 24 months?  How is that handled?

    OK
    So, if I'm understanding correctly, you can/have set up the $450,000 asset.

    24 months (2 yrs) at 5.5% on that amount would be $49,500 ($450,000 * .055 * 2).  I'd enter that as a Future Dated transaction into the asset account.

    THEN, when the Standstill period ends, convert to a Lender Loan for the amount of  $499,500.
    Q user since DOS version 5
    Now running Quicken Windows Subscription, Home & Business
    Retired "Certified Information Systems Auditor" & Bank Audit VP
  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    edited May 2020

    What Q product are you running?  What operating system?  What Build/Release?

    And, does the interest accrue during the 1st 24 months?  How is that handled?

    @ Suzanne Hearring

    I just answered another post involving the convert to a lending loan issue and found out that I couldn't convert any of my asset Accounts to a lending load if the Account had any transactions in it beyond the the original transaction that established the opening balance.  The "Convert to a Lending Loan..." option simply wasn't listed on the pull-down menu.

    So when it's time to convert your asset Account to a lending loan you may need to transfer the balance in your original Account - the one that presumably has the initial loan amount plus whatever interest entry or entries - to a new asset Account in order to convert it to a loan receivable.
  • NotACPA
    NotACPA SuperUser, Windows Beta Beta
    edited May 2020

    What Q product are you running?  What operating system?  What Build/Release?

    And, does the interest accrue during the 1st 24 months?  How is that handled?

    Interesting, and seemingly useless, restriction.  Thanks for the update.
    Q user since DOS version 5
    Now running Quicken Windows Subscription, Home & Business
    Retired "Certified Information Systems Auditor" & Bank Audit VP
  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    edited May 2020

    What Q product are you running?  What operating system?  What Build/Release?

    And, does the interest accrue during the 1st 24 months?  How is that handled?

    I have no idea if that's how it always worked, or not.  I didn't really run this to ground to see if if some "< X transactions" would work or not, but I sure couldn't get that Convert to a Lending Loan option to come up in any of the asset-type Accounts in my working file.
  • Rick Gumpertz
    Rick Gumpertz Member ✭✭✭
    edited May 2020

    What Q product are you running?  What operating system?  What Build/Release?

    And, does the interest accrue during the 1st 24 months?  How is that handled?

    Your calculation that 24 months (2 yrs) at 5.5% on that amount would be $49,500 ($450,000 * .055 * 2) assumes simple interest during the first two years.  It might be somewhat higher if it compounds...

  • NotACPA
    NotACPA SuperUser, Windows Beta Beta
    edited May 2020

    What Q product are you running?  What operating system?  What Build/Release?

    And, does the interest accrue during the 1st 24 months?  How is that handled?

    Rick, OP stated "interest added at the end of the Standstill" about 2 days ago (6 messages ago in this thread) ... so I based my calculations on simple interest rather than compound interest.

    I  would have used compound interest if she's stated "each month" or something similar.
    Q user since DOS version 5
    Now running Quicken Windows Subscription, Home & Business
    Retired "Certified Information Systems Auditor" & Bank Audit VP
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